Suppose you know what someone's goals are, and how much they value each of their goals. Then if you observe their behavior in a given situation, how can you understand why they acted the way they did?

If you ask someone in who subscribes to praxeology, along the lines of Ludwig von Mises or Murray Rothbard, it's my understanding that they would say that "Introspection is a good guide to human motivations, so just ask the person what was going through their head at the time, and that will explain how their actions were an attempt to achieve their goals." On the other hand, if you asked a mainstream economist of the neoclassical school, like Steve Landsburg in his book the Armchair Economist, they would say "Rationality is a good way to explain human behavior. Just look at what would maximize the person's success at their goals, given the resources they had at their disposal, and that's what they'll generally do."

My question is, has anyone made any arguments concerning which approach has more explanatory power, or more broadly which approach is more accurate about human behavior? Has any empirical work in psychology or behavioral economics shed light on this issue?

An economist of a Keynesian bent, for instance, might well say that neither approach is very fruitful, and they may well be right. But I'm interested in what's been said about the merits of the two approaches relative to each other, not their absolute merits.

Any help would be greatly appreciated.

Thank You in Advance.

EDIT: Just to clarify, here's my basic question: suppose you know for a fact exactly what someone's actual goals and desires are, and then you observe them doing a certain action. Then which is more likely to be the reason why they did the action: A) their self-reported reason for doing the action, or B) because it was the rational thing to do, given their goals and circumstances? Even if you think that both A and B have low probabilities of being right, which one has a higher probability of being right?

I recommend changing this bit "If you ask someone in who subscribes to praxeology...". Compare it with "If you ask someone in who subscribes to Darwinian evolution...". The person being asked may be an expert on the topic, or more likely, someone quite unqualified to speak in a manner that portrays him as an expert. It would be better if you copy-paste excerpts from recognized authorities, as representing that (or any) position.
– prashOct 26 '13 at 22:08

I'd go with plain old stupidity and carelessness for why a lot of people do what they do. Just look around. Rational? Goal-directed? If only!
– Janet WilliamsOct 26 '13 at 22:28

In some sense, this seems like it will be a dissatisfying answer to your question, because it is not clear how well we can actually measure (2). It is not clear we can ever know a person's actual "goals and desires". If our options are instead,

A) their self-reported reason for doing the action, or
B') [the best obtainable model of] their goals and circumstances

, I would still choose B'), on the basis that people tend to be worse observers of themselves than others are of them. There remains a weakness in this model, though. It assumes that we can model people well, which may not hold for all personality types. For example, we were terrible at understanding Autism for a long time, and are only still just learning how to productively interact with severely autistic people. It could be the case that in interacting with severely autistic people, A) would be better.

Keeping my response to the original form of the question: I would rate two of the claims in your question as highly dubious.

We are prone to gross error, even in favorable circumstances of extended reflection, about our own ongoing conscious experience, our current phenomenology. Even in this apparently privileged domain, our self-knowledge is faulty and untrustworthy. We are not simply fallible at the margins but broadly inept. Examples highlighted in this essay include: emotional experience (for example, is it entirely bodily; does joy have a common, distinctive phenomenological core?), peripheral vision (how broad and stable is the region of visual clarity?), and the phenomenology of thought (does it have a distinctive phenomenology, beyond just imagery and feelings?). Cartesian skeptical scenarios undermine knowledge of ongoing conscious experience as well as knowledge of the outside world. Infallible judgments about ongoing mental states are simply banal cases of self-fulfillment. Philosophical foundationalism supposing that we infer an external world from secure knowledge of our own consciousness is almost exactly backward.

My goal, by the end of this book, is to help you fundamentally rethink what makes you and the people around you tick. I hope to lead you there by presenting a wide range of scientific experiments, findings, and anecdotes that are in many cases quite amusing. Once you see how systematic certain mistakes are--how we repeat them again and again--I think you will begin to learn how to avoid some of them

Fortunately, neither of these claims need to be true in order for either answer to be plausible. This is because:

A person's inability to accurately self-report beliefs does not mean he/she does not have beliefs, and nor does it mean that he/she cannot be well-modeled as having beliefs.

Predictability does not require rationality.

This is good news to philosophers, who have a history of knowing that it takes a while to think in a properly philosophical manner. [citation needed] I'm sorry, I just had to say it that way. :-)

I said in my question that I wasn't interested in the absolute merits of these two approaches, but rather their relative merits. Even if both approaches are inaccurate, which approach is more accurate?
– Keshav SrinivasanOct 25 '13 at 11:51

Here's my basic question: suppose you know for a fact exactly what someone's actual goals and desires are (not their self-reported goals), and then you observe them doing a certain action. Then which is more likely to be the reason why they did the action: A) their self-reported reason for doing the action, or B) because it was the rational thing to do, given their goals and circumstances? Even if both A and B have low probabilities of being right, which one has a higher probability of being right?
– Keshav SrinivasanOct 26 '13 at 1:59

@KeshavSrinivasan: (1) You might consider editing your question. (2) I would suggest looking at marketing, sales, and politics material. Focus on those with the most to gain in manipulating people, and see how they do it.
– labreuerOct 26 '13 at 3:11

I am not an expert, but if you ask "how can you understand why they acted the way they did?", that's beyond the scope of praxeology. I quote from Mises' Human Action:

The field of our science is human action, not the psychological events which result in an action. It is precisely this which distinguishes the general theory of human action, praxeology, from psychology. The theme of psychology is the internal events that result or can result in a definite action. The theme of praxeoIogy is action as such. [...] Whether an action stems from clear deliberation, or from forgotten memories and suppressed desires which from submerged regions, as it were, direct the will, does not influence the nature of the action.

For the second part of your question,

has anyone made any arguments concerning which approach has more explanatory power, or more broadly which approach is more accurate about human behavior? Has any empirical work in psychology or behavioral economics shed light on this issue?

Here's Rothbard on the topic, from "Praxeology: The Methodology of Austrian Economics":

In brief, praxeology consists of the logical implications of the universal formal fact that people act, that they employ means to try to attain chosen ends. Technology deals with the contentual problem of how to achieve ends by adoption of means. Psychology deals with the question of why people adopt various ends and how they go about adopting them. Ethics deals with the question of what ends, or values, people should adopt. And history deals with ends adopted in the past, what means were used to try to achieve them—and what the consequences of these actions were.

Praxeology, or economic theory in particular, is thus a unique discipline within the social sciences; for, in contrast to the others, it deals not with the content of men's values, goals, and actions—not with what they have done or how they have acted or how they should act—but purely with the fact that they do have goals and act to attain them. The laws of utility, demand, supply, and price apply regardless of the type of goods and services desired or produced. As Joseph Dorfman wrote of Herbert J. Davenport's Outlines of Economic Theory (1896): The ethical character of the desires was not a fundamental part of his
inquiry. Men labored and underwent privation for "whiskey, cigars, and burglars' jimmies," he said, "as well as for food, or statuary or harvest machinery." As long as men were willing to buy and sell "foolishness and evil," the former commodities would be economic factors with market standing, for utility, as an economic term, meant merely adaptability to human desires. So long as men desired them, they satisfied a need and were motives to production. Therefore economics did not need to investigate the origin of choices.

Well, Mises may claim that he isn't concerned with the workings of the human mind, but as a practical matter he is. A great deal of praxeological reasoning is done by appeals to introspection. When a mainstream economists give counterintuitive explanations for some behavior, like why people vote when they can't affect the outcome, Austrians tend to respond with something like "You can ask the voters, and they won't give you that far-fetched explanation".
– Keshav SrinivasanOct 24 '13 at 12:48

And of course the issue is under the purview of psychology, but I want to know what psychology actually has to say on this question of whether introspection or rationality is more accurate.
– Keshav SrinivasanOct 24 '13 at 12:50

I disagree completely with your characterization with "appeals to introspection". This is Mises, again "No bridge connects -- as far as we can see today -- these two spheres. Identical external events result sometimes in different human responses, and different external events produce sometimes the same human response. We do not know why." As for "whether introspection or rationality", I don't see this split between introspection and rationality. Rationality is a very loosely defined word, and the way I understand it, introspection is part of it.
– prashOct 24 '13 at 13:34

I don't see how that quote discusses introspection at all. As far as rationality goes, at least as it's understood in the mainstream neoclassical tradition, it's about your actions maximizing success in achieving your goals, given the resources you have at your disposal. So someone who believes in that kind of rationality would say that if you knew a person's goals and the means they have at their disposal, you can completely explain their actions. But Misesians think actions just represent attempts to achieve your goals, not necessarily the best possible way to try to achieve your goals.
– Keshav SrinivasanOct 24 '13 at 13:49

What I quoted does not discuss introspection. Quite to the contrary, it emphasizes that how actions come about is beyond the scope of praxeology, and sometimes we will never know why a specific action was taken. Also, I believe that there is usually no "best possible way" to achieve goals. The "best" is often seen in hindsight, not in advance, whether one is moving pieces on a chess board, or allocating resources of a factory.
– prashOct 24 '13 at 14:36